You are thinking from capital account point of view...but as currency is pegged with capital control's country...we have to think from current account point of view...i.e. in high expansionary fiscal policy gdp will go up but in tight monetary policy gdp will go down that's why effect on currency isRead more
You are thinking from capital account point of view…but as currency is pegged with capital control’s country…we have to think from current account point of view…i.e. in high expansionary fiscal policy gdp will go up but in tight monetary policy gdp will go down that’s why effect on currency is indeterminate..
Bcz it's written in que that earning in the next year without additional planned inv I.e. agar retaintion zero hota toh earings will be 2 ...but as they have a payout ratio of 0.4 we have to grow 2009 ka earning by multiplying 2008 ka earning...
Bcz it’s written in que that earning in the next year without additional planned inv I.e. agar retaintion zero hota toh earings will be 2 …but as they have a payout ratio of 0.4 we have to grow 2009 ka earning by multiplying 2008 ka earning…
The 2nd line of que stats that inv horizon is 2 yrs or less (then also he buys 4 yr zcb i.e. a long term bond) and 5th line of que stats that int rate remain stable...these show that it's a riding the yield curve strategy...so.. calculate the value of bond for 4 yr zcb@ 4.75%...which will be 83.058.Read more
The 2nd line of que stats that inv horizon is 2 yrs or less (then also he buys 4 yr zcb i.e. a long term bond) and 5th line of que stats that int rate remain stable…these show that it’s a riding the yield curve strategy…so.. calculate the value of bond for 4 yr zcb@ 4.75%…which will be 83.058…then calculate 2 yr zcb ka value at 3% (as after 2 yrs rates will be the same as per riding the yield curve i.e. 2.7+0.3) which will be 94.26…so annualised return will be (94.26/83.058)^0.5 = 6.53%
Ans should be B...see C can't be the ans as 5% shows minimum loss and not maximum loss...A can't be the ans as 90000(i.e. 6m*1.5%) is already a daily var...so no need to divide it by 20 trading days a month... The interpretation of 5% daily var is 90k value is expected to decline once in a 20/22 traRead more
Ans should be B…see C can’t be the ans as 5% shows minimum loss and not maximum loss…A can’t be the ans as 90000(i.e. 6m*1.5%) is already a daily var…so no need to divide it by 20 trading days a month…
The interpretation of 5% daily var is 90k value is expected to decline once in a 20/22 trading days…
As we increases confidence level, var amount will also get increases Ex is share price 600$, annualised volatility is 18%...if we calculate 1% var then, 2.33*0.18/√250*600= 15.91$ daily var amt If we find 5% var then 1.645*0.18/√250*600 = 11.23$ daily var amt so as we get less confident our var amtRead more
As we increases confidence level, var amount will also get increases
Ex is share price 600$, annualised volatility is 18%…if we calculate 1% var then, 2.33*0.18/√250*600= 15.91$ daily var amt
If we find 5% var then 1.645*0.18/√250*600 = 11.23$ daily var amt
so as we get less confident our var amt get decreases.
As per core reading, A commodity is most likely to be physically stored by an arbitrageurs (and not by the speculators or exchanges) so that they can exploit the difference between spot and futures prices relative to the cost of storing the commodity. So ans will be B.
As per core reading,
A commodity is most likely to be physically stored by an arbitrageurs (and not by the speculators or exchanges) so that they can exploit the difference between spot and futures prices relative to the cost of storing the commodity.
As it's written in question that portfolio has a positive gamma that means we have already bought option, so to make it gamma neutral we have to sell option i.e. according to answers given, we will sell put option. As we have sold put option, portfolio become non dalta neutral so to make it delta neRead more
As it’s written in question that portfolio has a positive gamma that means we have already bought option, so to make it gamma neutral we have to sell option i.e. according to answers given, we will sell put option.
As we have sold put option, portfolio become non dalta neutral so to make it delta neutral we will sell shares. So ans will be A.
Doubt relating to Currency Exchange Rates
You are thinking from capital account point of view...but as currency is pegged with capital control's country...we have to think from current account point of view...i.e. in high expansionary fiscal policy gdp will go up but in tight monetary policy gdp will go down that's why effect on currency isRead more
You are thinking from capital account point of view…but as currency is pegged with capital control’s country…we have to think from current account point of view…i.e. in high expansionary fiscal policy gdp will go up but in tight monetary policy gdp will go down that’s why effect on currency is indeterminate..
See lessGGM
Bcz it's written in que that earning in the next year without additional planned inv I.e. agar retaintion zero hota toh earings will be 2 ...but as they have a payout ratio of 0.4 we have to grow 2009 ka earning by multiplying 2008 ka earning...
Bcz it’s written in que that earning in the next year without additional planned inv I.e. agar retaintion zero hota toh earings will be 2 …but as they have a payout ratio of 0.4 we have to grow 2009 ka earning by multiplying 2008 ka earning…
See lessTerm structure
This is a screenshot from institute book...
This is a screenshot from institute book…
See lessFIXED INCOME Q39
The 2nd line of que stats that inv horizon is 2 yrs or less (then also he buys 4 yr zcb i.e. a long term bond) and 5th line of que stats that int rate remain stable...these show that it's a riding the yield curve strategy...so.. calculate the value of bond for 4 yr zcb@ 4.75%...which will be 83.058.Read more
The 2nd line of que stats that inv horizon is 2 yrs or less (then also he buys 4 yr zcb i.e. a long term bond) and 5th line of que stats that int rate remain stable…these show that it’s a riding the yield curve strategy…so.. calculate the value of bond for 4 yr zcb@ 4.75%…which will be 83.058…then calculate 2 yr zcb ka value at 3% (as after 2 yrs rates will be the same as per riding the yield curve i.e. 2.7+0.3) which will be 94.26…so annualised return will be (94.26/83.058)^0.5 = 6.53%
See lessvar
Ans should be B...see C can't be the ans as 5% shows minimum loss and not maximum loss...A can't be the ans as 90000(i.e. 6m*1.5%) is already a daily var...so no need to divide it by 20 trading days a month... The interpretation of 5% daily var is 90k value is expected to decline once in a 20/22 traRead more
Ans should be B…see C can’t be the ans as 5% shows minimum loss and not maximum loss…A can’t be the ans as 90000(i.e. 6m*1.5%) is already a daily var…so no need to divide it by 20 trading days a month…
The interpretation of 5% daily var is 90k value is expected to decline once in a 20/22 trading days…
See lessDerivative
In the interest rate binomial tree we assume probability of 0.5 at each node..
In the interest rate binomial tree we assume probability of 0.5 at each node..
See lessHow to calculate Spot rates from Par rates?
See the solution..
See the solution..
See lessPortfolio Management
As we increases confidence level, var amount will also get increases Ex is share price 600$, annualised volatility is 18%...if we calculate 1% var then, 2.33*0.18/√250*600= 15.91$ daily var amt If we find 5% var then 1.645*0.18/√250*600 = 11.23$ daily var amt so as we get less confident our var amtRead more
As we increases confidence level, var amount will also get increases
Ex is share price 600$, annualised volatility is 18%…if we calculate 1% var then, 2.33*0.18/√250*600= 15.91$ daily var amt
If we find 5% var then 1.645*0.18/√250*600 = 11.23$ daily var amt
so as we get less confident our var amt get decreases.
How can the answer be arbitragers as there is an investment required to buy and hold the commodity. Sir in the class stated that answer is C informed investor but the answer is given as B !
As per core reading, A commodity is most likely to be physically stored by an arbitrageurs (and not by the speculators or exchanges) so that they can exploit the difference between spot and futures prices relative to the cost of storing the commodity. So ans will be B.
As per core reading,
A commodity is most likely to be physically stored by an arbitrageurs (and not by the speculators or exchanges) so that they can exploit the difference between spot and futures prices relative to the cost of storing the commodity.
So ans will be B.
See lessOption Greeks vrm
As it's written in question that portfolio has a positive gamma that means we have already bought option, so to make it gamma neutral we have to sell option i.e. according to answers given, we will sell put option. As we have sold put option, portfolio become non dalta neutral so to make it delta neRead more
As it’s written in question that portfolio has a positive gamma that means we have already bought option, so to make it gamma neutral we have to sell option i.e. according to answers given, we will sell put option.
As we have sold put option, portfolio become non dalta neutral so to make it delta neutral we will sell shares. So ans will be A.
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